"There's a special synergy here," said Dr. George Fulop, an analyst with Needham. Both Needham and SunTrust have done investment banking business with Nastech.

A study in the New England Journal of Medicine last summer found that PTH increased bone density in women already taking a drug similar to P&G's Actonel.

"With this deal, P&G becomes the only company capable of capitalizing on this medical breakthrough," Nastech CEO Dr. Steven Quay said during a conference call Wednesday.

P&G's sales and marketing force was important to Nastech. The company had intended to develop and commercialize PTH on its own until last fall.

"We determined ... that it represented a larger opportunity than we originally anticipated, but a corresponding larger marketing cost to get there," Quay said.

The findings in the New England Journal study, if confirmed, would "greatly expand" the number of patients who could benefit from PTH, Quay said. And Nastech's own market research found that use of Forteo, an injectable PTH approved in 2002 and sold by Eli Lilly, is increasing rapidly.

Forteo had 2005 sales of $389 million, up 63 percent from 2004.

Quay said Lilly's sales of Forteo are expected to reach $800 million by 2008. He did not divulge Nastech's projections for a nasal PTH, which the company thinks would overcome the "barrier to broad use" a daily injection represents.

However, he did say nasal PTH has "blockbuster potential." The industry considers a drug to be a blockbuster if it has annual sales of $1 billion or more.

Some 10 million Americans, mostly women, have the bone-thinning disease, and another 34 million more could be at risk, according to the National Osteoporosis Foundation.

Nastech and P&G will jointly develop nasal spray PTH, which faces a relatively easy path to approval, thanks to an agreement Nastech reached with the Food and Drug Administration.

Because PTH is already approved in injectable form, the FDA is requiring fewer clinical studies.

A crucial study is expected to begin this year comparing bone density in patients taking nasal PTH to the injectable version.

Fulop expects the nasal PTH to reach market by 2009, but said that "given P&G's muscle," development could be accelerated.